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New Legislation, Winter Flooding News for NFIP Policyholders

Take Note of Changes in Policy Rates Due to New NFIP Legislation

Below please find important information about new legislation that may affect flood insurance policy rates for home and business owners in your community. Please share this information via your communication channels (e.g., town hall meetings, Webpages, e-mail alerts, newsletters) so residents in your area are aware of how the changes may impact their current and/or future rates.

 

The Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) requires FEMA to take immediate steps to eliminate a variety of existing flood insurance subsidies and calls for a number of changes in how the program operates. The new rates will reflect the full flood risk of an insured building, and some insurance subsidies and discounts will be phased out and eventually eliminated. Rates on almost all buildings that are, or will be, in SFHAs will be revised over time to reflect full flood risks. Based on various conditions set forth in the law, subsidies and grandfathered rates will be eliminated for most properties in the future.

 

Effective on January 1, 2013, flood insurance policy rates for some older non-primary residences in SFHAs that received subsidized rates based on their "pre-Flood Insurance Rate Map" (pre-FIRM) status will increase by 25 percent a year until they reflect the full-risk rate. A pre-FIRM building is one that was built before the community's first flood map became effective and has not been substantially damaged or improved. If the building will be lived in for less than 80 percent of the policy year, it is considered to be a non-primary residence. Click here to read a National Flood Insurance Program (NFIP) bulletin that provides additional details around the legislation.

 

The NFIP will also begin eliminating subsidized premiums for other buildings effective on August 1, 2013, as mandated by Section 100205 of BW-12. Click here to read the full bulletin and note that key changes include:

 

  • Subsidies will be phased out for severe repetitive loss properties consisting of 1-4 residences, business properties, and properties that have incurred flood-related damages where claims payments exceed the fair market value of the property.
  • Properties with subsidized rates will move directly to full-risk rates after a sale of the property or after the policy has lapsed.
  • New policies will be issued at full-risk rates.

Note that policyholders should be aware that allowing a policy to lapse could be costly. A new application will be required and full-risk rates will take effect.

 

Posted 10:02 AM  View Comments

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